RIPHAH INTERNATIONAL UNIVERSITY

FAISALABAD

Name: Muneeb Ahmed

Class: MBA Exec. 2nd

Roll No: 15328

Subject: Marketing Management

Assignment Topic: General Electric Matrix

Submitted To: Madam Saira

Date: 15/03/2020
 General Electric Matrix
Introduction
Introduced in the early Seventies as a specific framework for the evaluation of
investment opportunities as part of product portfolio management, the General
Electric/McKinsey Matrix is still widely used for the analysis of competitive
scenarios. In this study, this managerial tool is applied to the apparel sector and four
well-known Italian fashion companies are analyzed. The procedure for creating the
matrix is described and a detailed presentation is made, for each company over a five-
year-period, of the results relative to the two typical dimensions of the matrix:
business competitiveness and industry attractiveness. Considering the current
tendency of the majority of fashion and luxury companies to internationalize and
develop multi-product and multi-brand diversification strategies, this study may be
useful for marketers working in these sectors who intend to develop positioning and
competitiveness analyses. Additionally, given the limited amount of academic studies
on the application of this matrix to the fashion industry, this study can help fill that
gap and describe the state of the art in the field, enriching the literature on the subject
and creating new points of departure for future research. The paper presents results
that, although they are based on a limited selection of companies, provide an accurate
demonstration of the methodology applied and highlight a few differences found
between the companies examined; in particular, between fashion brands with a very
high positioning (“couture”) and those with a medium/high positioning (“diffusion” or
“ready-to-wear”).

Table 1. Industry attractiveness for Armani

Armani
Industry Attractiveness Y1 Y2 Y3 Y4 Y5 Average
Annual Market Growth Rate +1.9% +9.9% +8.5% +4.3% +5.6% 7%
Employment
225 236 249 271 284 270
(No. of employees)

Table 2. Industry attractiveness for Benetton

Benetton
Industry Attractiveness Y1 Y2 Y3 Y4 Y5 Average
Annual Market Growth Rate N/A +12.4% +8.5% +9% -2.9% +5.4%
Employment 2 627 2 697 2 695 2 503 2 599 2 551
(No. of employees)

Table 3. Industry attractiveness for Moschino

Moschino
Industry Attractiveness Y1 Y2 Y3 Y4 Y5 Average
Annual Market Growth Rate N/A -5% +7.6% +18.5% +3.3% +6%
Employment 569 571 588 595 570 580
(No. of employees)
Table 4. Industry attractiveness for Valentino
Valentino
Industry Attractiveness Y1 Y2 Y3 Y4 Y5 Average
Annual Market Growth Rate N/A +15.3% +106.5% +43.7% +3.6% +38.7%
Employment 247 245 232 259 381 314
(No. of employees)

Table 5. Comparison of industry attractiveness values and ratings

Armani Benetton Moschino Valentino

Industry Weight Value Ratin Value Rating Value Rating Value Rating
Attractiveness g
Annual Market 5 7% 1.19 5.4% 1 6% 1.07 38.7% 5
Growth Rate
Employment
3 270 1 2 551 5 580 1.55 314 1.18
(No. of employees)

Table 6. Competitiveness for Armani

Armani
Company Competitiveness Y1 Y2 Y3 Y4 Y5 Average
Gross Operating
33.3 30.1 21.5 17.6 28.4 28.4
Margin (millions of
euros)
Operating Income
29.2% 25.6% 16.7% 12.1% 19.6% 13.5%
(% of revenues )
Net Profit
83.3 71.4 91.3 84.9 173 128
(millions of
euros)
Leftovers
985 894 755 1 071 869 914.8
(millions of
euros)
Availability Index 0.9 3.30 2.7 0.46 0.6 1.75
Accounts
18.8% 62.8% 35.2% 16.8% 29.4% 32.6%
Receivable
Turnover
Accounts Payable Turnover 67.1% 36.2% 24.4% 111.3% 122.1% 72.22%
R.O.I. 7.8% 6.8% 4.6% 2.27% 4% 5.1%
Table 7. Competitiveness for Benetton
Benetton
Company Competitiveness Y1 Y2 Y3 Y4 Y5 Average
Gross Operating Margin 465.7 568.6 609.3 648.8 581.7 581.7
(millions of euros)
Operating Income 11.1% 14.4% 13% 12.7% 11.1% 12%
(% of revenues)
Net Profit
52.4 242 78.2 83.7 -2.8 119
(millions of euros)
Leftovers 148.9 169.5 165.7 144.4 120.2 144
(millions of euros)
Availability Index 1.53 1.7 1.03 0.7 0.9 1.17
Accounts Receivable
44.8% 40.7% 9.2% 49% 44.6% 44%
Turnover

Accounts Payable Turnover 46.4% 33% 64.7% 82.6% 76.8% 74.7%

R.O.I. 10% 14.8% 13.1% 12.1% 10.2% 12.04%

Table 8. Competitiveness for Moschino

Moschino
Company Competitiveness Y1 Y2 Y3 Y4 Y5 Average
Gross Operating Margin
20.18 6.3 10.7 17.7 28.4 19.7
(millions of euros)
Operating Income
N/A N/A 5.3% 9.3% 11% 55.9%
(% of revenues)
Net Profit
1.6 0.5 -9.4 4.2 9.1 1.3
(millions of euros)
Leftovers
17 411 17 232 18 785 18 435 15 768 16 888
(millions of euros)
Availability Index 1.15 0.43 0.56 0.53 0.82 0.7
Accounts Receivable
18% 19% 21% 18% 25% 20%
Turnover

Accounts Payable Turnover 15% 16% 25% 26% 35% 23%

R.O.I. 2.18% 4.78% 6.24% 10.9% 12.6% 9.9%

Table 9. Competitiveness for Valentino
Valentino
Company Competitiveness Y1 Y2 Y3 Y4 Y5 Average
Gross Operating Margin -2.2 -11.9 -13.1 1 N/A 1
(millions of euros)
Operating Income 18.5% 43.9% 22.2% 2.9% 7.9% 7.9%
(% of revenues)
Net Profit -14.8 -23.2 -24.6 -27.9 -42 -32
(millions of euros)
Leftovers 3 521 2 515 3 733 13 562 14 770 10 529
(millions of euros)
Availability Index 0.8 0.7 0.8 0.8 0.2 0.5
Accounts
524.7% 427.2% 229.4% 179.3% 32.1% 340%
Receivable
Turnover

Accounts Payable Turnover 19% 20% 19.7% 21.6% 27.3% 23.5%

R.O.I. 2.16% 6.3% 6.2% 1.13% 4.5% 5.25%

Table 10. Comparison of the values and rating for company competitiveness

Armani Benetton Moschino Valentino

Value Value Value Value
Company
Weight (millions Rating (millions Rating (millions Rating (millions Rating
Competitiveness
of euros) of euros) of euros) of euros)
Gross Operating
5 28.4 1.29 581.7 5 19.7 1.23 1 1
Margin
Operating Income
5 13.5% 2.34 12% 2.25 55.9% 5 -7.9% 1
(% of revenues)
Net Profit 5 128 5 119 4.8 1.3 1.83 -32 1
Leftovers 3 914.8 1.185 144 1 16 888 5 10 529 3.47
Availability Index 4 1.75 5 1.17 3.2 0.7 1.7 0.5 1
Accounts Receivable
4 32.6% 1.17 44% 1.3 20% 1 340% 5
Turnover
Accounts Payable
4 72.22% 4.81 74.7% 5 23% 1 23.5% 1.04
Turnover
R.O.I. 5 5.1% 1 12.04% 5 9.9% 3.8 5.25% 1.1

Table 11. Comparison of the turnover values and ratings

Armani Benetton Moschino Valentino

Values Values Values Values
Turnover
(millions Rating (millions Rating (millions of Rating (millions Rating
of euros) of euros) euros) of euros)
143.7 1.8 1 922 25 147 1.9 114.2 1.5
Recommended Strategies
Armani:

 Harvest

 Armani doesn’t have sustainable competitive advantages and is incapable of

achieving it and is performing relatively poor.

 Armani should be divested. If that’s impossible and there’s no way to turn the
losses into profits, the company should liquidate the business unit.

Benetton:
 Hold
 We should invest into Benetton only if we have the money left over the
investments in invest/grow business units group.
 Benetton should be considered last as there’s a lot of uncertainty with it.
Moschino:

 Harvest

 Moschino doesn’t have sustainable competitive advantages and is incapable of

achieving it and is performing relatively poor.
 Moschino should be divested. If that’s impossible and there’s no way to turn
the losses into profits, the company should liquidate the business unit.
Valentino:

 Harvest

 Moschino doesn’t have sustainable competitive advantages and is incapable of

achieving it and is performing relatively poor.
 Moschino should be divested. If that’s impossible and there’s no way to turn
the losses into profits, the company should liquidate the business unit.